Cellcom Israel said it has entered a binding memorandum of understanding for the purchase of Golan Telecom's entire share capital for ILS 590 million. The agreed deal, subject still to due diligence, sees Golan Telecom rejecting a competing offer from rival Pelephone.
Cellcom previously tried to acquire Golan Telecom in 2015 but the merger was rejected by regulatory authorities. The new offer comes amid a fresh round of consolidation talks in the market, after Altice's Hot launched a bid for Partner Communications.
After their first merger attempt was scrapped, Cellcom and Golan Telecom entered a network sharing partnership. The new merger agreement will reportedly forgive ILS 130 million of debt Golan owes Cellcom for use of its network, the Israeli press reported.
Cellcom said it would pay for the acquisition in two installments: ILS 413 million paid upon completion and ILS 177 million within three years from close.
Also, upon close, Cellcom Israel will pay Golan Telecom shareholders an amount equal to the cash and cash equivalents of Golan Telecom as of the closing date minus any debt, about ILS 7.58 million per month for the period between the closing date and 31 December. It will also pay back investments made by Golan Telecom in the 5G shared network from the date the MOU was signed and until the transaction is completed.
The parties will negotiate a detailed agreement but are bound by the MOU whatever the outcome. In case the conditions for the completion of the transaction are not met by end December, the MOU or detailed agreement will expire.
